TIDMDPP
RNS Number : 7583Z
DP Poland PLC
16 January 2024
DP Poland PLC
("DP Poland", the "Company" or the "Group")
Full Year unaudited Trading Update for 2023
DP Poland, the operator of Domino's pizza stores and restaurants
across Poland and Croatia, announces a trading update for Q4 2023
and FY 2023.
DP Poland's Chief Executive Officer, Nils Gornall, said:
"2023 has been a year of hard work and high rewards, with 2023
being a record year and Q4 being the strongest quarter in the
Company's history. I want to express my gratitude to our employees
who have embraced the High Volume Mentality and transformed Poland
into one of the fastest growing Domino's markets globally. We have
relentlessly focused on providing a compelling value proposition
for our customers based on fantastic quality pizza delivered
quickly.
In Poland, LFL System Sales grew by almost 20% in 2023. This
growth was driven by increased LFL system orders, which accelerated
through the year, growing by 27% in Q4 2023.
Average weekly order counts reached 731 for the year, up 19% on
2022, whilst average delivery times reduced 4%, driving a move to
profitability in August. In Q4 2023, the average weekly order count
exceeded 800 or above.
We finish the year with a store network that has been optimized,
supporting higher LFL sales as well as growing our store count to
116 stores. Importantly, we have a highly motivated team ready to
continue the momentum we have built in 2023 and I'm excited to see
the business well positioned to capitalise on this potential in
2024."
Highlights
-- Expected FY 2023 Group System Sales of GBP46.0m
-- LFL System Sales in Poland increased by 27.5% in Q4 to the
highest in the Company's history and by 19.7% for FY2023
o LFL Delivery - 33.6% in Q4 and 20.7% in FY 2023
o LFL Non-Delivery - 15.8% in Q4 and 17.8% in FY 2023
-- LFL System order count in Poland increased by 27.1% in Q4 and by 16.4% in FY 2023.
-- Croatian Total System Sales grew by 75.7% in Q4 and by 44.2% in FY 2023
o Total Order Count grew by 63.9% in Q4 and by 29.7% in FY 2023,
driven by new store openings.
o Croatian LFL System Sales grew by 2.2% in Q4 and by 3.2% in FY
2023.
-- Food costs for 2023 were in line with our expectations, reducing in H2 2023
-- Labour costs were also in line with our expectations for 2023
but inflationary pressures are expected to continue in 2024
-- Pre-IFRS16 EBITDA profitable since August and expected to be
in line with market expectations for FY 2023
-- Cash at bank of GBP2.2m as at 31 December 2023 (GBP2.7m cash as at 30 June 2023)
Operational highlights
-- A verage weekly order count in Poland exceeded 800 in Q4 and
reached 731 for FY 2023 (an increase of 19% YoY)
-- In 2023, average delivery time in Poland dropped to 27min (4% improvement YoY).
-- In 2023, Domino's opened 5 stores (3 in Poland and 2 in
Croatia), closed 2 in Poland and fully refurbished 5 stores.
-- In Q1 2023, Domino's held a TV campaign in Poland, which
generated sales momentum for the rest of the year.
-- Revised pricing strategy with targeted communication &
promotional actions have improved customer satisfaction ratings and
translated to strong quarter 4.
-- Inflation in Poland has abated since April 2023, following 17
months of double-digit inflation to reach 6.1% YoY at the end of
December 2023. This trend is expected to continue in 2024.
Trading Update 2023
Poland
PLNm Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023
----------------- ----------------- ----------------- -----------------
PLNm % YoY PLNm % YoY PLNm % YoY PLNm % YoY PLNm % YoY
change change change change change
------------- -------- ------- -------- ------- -------- ------- -------- ------- -------- -------
Total System
sales(1) 53.1 15.4% 55.0 14.4% 55.0 7.10% 65.5 24.7% 228.6 15.5%
LFL System
sales(2) 52.2 19.4% 53.7 16.8% 54.3 14.1% 64.6 27.5% 224.8 19.7%
non-delivery 16.9 47.7% 18.8 6.3% 20.0 11.9% 20.1 15.8% 75.8 17.8%
delivery 35.3 9.3% 34.8 23.3% 34.3 15.5% 44.5 33.6% 148.9 20.7%
------------- -------- ------- -------- ------- -------- ------- -------- ------- -------- -------
M Orders Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023
----------------- ----------------- ----------------- -----------------
M Orders % YoY M Orders % YoY M Orders % YoY M Orders % YoY M Orders % YoY
change change change change change
-------- ------- -------- ------- -------- ------- -------- ------- -------- -------
Total System
orders(1) 1.0 4.0% 1.0 12.2% 1.0 9.1% 1.2 24.3% 4.2 11.9%
LFL System
orders(2) 0.9 7.3% 1.0 15.5% 1.0 15.4% 1.2 27.1% 4.1 16.4%
------------- -------- ------- -------- ------- -------- ------- -------- ------- -------- -------
(1) System Sales and System orders - total retail sales or
orders including sales or orders from corporate and sub-franchised
stores.
(2) Like-for-like System Sales growth in Polish Z oty, matching
trading periods for the same stores or orders growth in units,
matching trading periods for the same stores
Trading in Poland was strong throughout 2023, with consistent
double digit sales growth across delivery and non-delivery, driven
largely by order count growth and accelerating in Q4. These results
have been achieved as a result of the commitment to a compelling
value proposition for customers; high-quality pizzas, delivered
quickly.
In addition to strong customer order growth, we have seen
improved customer satisfaction ratings, validating the new pricing
strategy as well as enhanced customer targeting and communication.
We have also seen significantly increased trading from store
refurbishments in 2023, improving corporate branding with a
modernised and fresh look.
Q4 2023 was the strongest quarter in the history of company,
with 27.5% growth YoY in LFL System Sales and 27.1% LFL System
order count growth.
During the year, we opened three stores, closed two stores and
fully refurbished five stores continuing our plan to optimise,
upgrade and expand our portfolio. We have now concluded the store
optimisation initiative from 2022, leaving a strong portfolio of
stores as a platform for future growth.
During the year we also implemented cost optimisation projects,
including digitalisation of processes and an automated labour
scheduling system, which have delivered significant cost
saving.
Croatia
EURm Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023
------------- ------------- ------------- -------------
EURm % YoY EURm % YoY EURm % YoY EURm % YoY EURm % YoY
change change change change change
------------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
Total System
sales(1) 0,5 52,9% 0,5 37,7% 0,6 10,9% 1,0 75,7% 2,6 44,2%
LFL System
sales(2) 0,4 15,7% 0,4 5,6% 0,5 -5,3% 0,6 2,2% 1,8 3,2%
------------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
(1) System Sales and System orders - total retail sales or
orders including sales or orders from corporate stores.
(2) Like-for-like System Sales growth in Euro, matching trading
periods for the same stores or orders growth in units, matching
trading periods for the same stores
In 2023, the Croatian team opened two stores in June and in
October, both of which have exceeded sales expectations and
contributed to Total System Sales growth of 44.2% YoY.
The three existing Croatian stores maintained their high LFL
system sales through 2023, despite wider inflationary pressures,
exacerbated by the transition of the Croatian currency from the
Kuna to the Euro at the beginning of 2023 impacting consumer
confidence.
The Croatian business also benefitted from the utilization of
group purchasing from early 2023, which meaningfully reduced
costs.
Outlook
2023 was a record year for DP Poland. In particular, the second
half of the year showed an acceleration in growth, with
consistently improving profitability. The Company achieved
pre-IFRS16 EBITDA profitability from August and 2023 FY performance
is in line with market expectations.
In 2024, we expect volume led growth to continue, supported by
an easing of inflationary pressures and a new pro-European
parliament following the recent Polish election. We will continue
to focus on delivering a compelling customer value proposition as
we grow, ensuring quick delivery times.
The business now has the solid foundations required for future
expansion and in 2024 will begin the transition of the Company
towards a more widespread sub-franchised business model.
The person responsible for arranging the release of this
announcement on behalf of the Company is Nils Gornall, CEO.
Enquiries:
DP Poland plc
Nils Gornall , CEO
Tel: +44 (0) 20 3393 6954
Email: ir@dppoland.com
Singer Capital Markets (Nominated Adviser and Broker)
Shaun Dobson / Jen Boorer
Tel: +44 (0) 20 7496 3000
Notes for editors
About DP Poland plc
DP Poland has the exclusive right to develop, operate and
sub-franchise Domino's Pizza stores in Poland and Croatia. The
group operates 116 stores and restaurants throughout cities and
towns in Poland and Croatia.
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END
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